The Economics (and Nostalgia) of Dead Malls

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Once a thriving mall, Rolling Acres in Akron, Ohio, is now a crumbling reminder of better days. Since 2010, more than two dozen enclosed shopping malls have been shuttered, and 60 more are on the brink, an analyst says.

OWINGS MILLS, Md. — Inside the gleaming mall here on the Sunday before Christmas, just one thing was missing: shoppers.

The upbeat music of “Jingle Bell Rock” bounced off the tiles, and the smell of teriyaki chicken drifted from the food court, but only a handful of stores were open at the sprawling enclosed shopping center. A few visitors walked down the long hallways and peered through locked metal gates into vacant spaces once home to retailers like H&M, Wet Seal and Kay Jewelers.

“It’s depressing,” Jill Kalata, 46, said as she tried on a few of the last sneakers for sale at the Athlete’s Foot, scheduled to close in a few weeks. “This place used to be packed. And Christmas, the lines were out the door. Now I’m surprised anything is still open.”

The Owings Mills Mall is poised to join a growing number of what real estate professionals, architects, urban planners and Internet enthusiasts term “dead malls.” Since 2010, more than two dozen enclosed shopping malls have been closed, and an additional 60 are on the brink, according to Green Street Advisors, which tracks the mall industry.

Premature obituaries for the shopping mall have been appearing since the late 1990s, but the reality today is more nuanced, reflecting broader trends remaking the American economy. With income inequality continuing to widen, high-end malls are thriving, even as stolid retail chains like Sears, Kmart and J. C. Penney falter, taking the middle- and working-class malls they anchored with them.

“It is very much a haves and have-nots situation,” said D. J. Busch, a senior analyst at Green Street. Affluent Americans “will keep going to Short Hills Mall in New Jersey or other properties aimed at the top 5 or 10 percent of consumers. But there’s been very little income growth in the belly of the economy.”

At Owings Mills, J. C. Penney and Macy’s are hanging on, but other midtier emporiums like Sears, Lord & Taylor, and the regional department store chain Boscov’s have all come and gone as anchors.

Having opened in 1986 with a renovation in 1998, Owings Mills is young for a dying mall. And while its locale may have contributed to its demise, other forces played a crucial role, too, like changing shopping habits and demographics, experts say.

“I have no doubt some malls will survive, but major segments of our society have gotten sick of them,” said Mark Hinshaw, a Seattle architect, urban planner and author.

One factor many shoppers blame for the decline of malls — online shopping — is having only a small effect, experts say. Less than 10 percent of retail sales take place online, and those sales tend to hit big-box stores harder, rather than the fashion chains and other specialty retailers in enclosed malls.

Instead, the fundamental problem for malls is a glut of stores in many parts of the country, the result of a long boom in building retail space of all kinds.

“We are extremely over-retailed,” said Christopher Zahas, a real estate economist and urban planner in Portland, Ore. “Filling a million square feet is a tall order.”

Like beached whales, dead malls draw fascination as well as dismay. There is a popular website devoted to the phenomenon — deadmalls.com — and it has also become something of a cultural meme, with one particularly spooky scene in the movie “Gone Girl” set in a dead mall.

“Everybody has memories from childhood of going to the mall,” said Jack Thomas, 26, one of three partners who run the site in their spare time. “Nobody ever thinks a mall is going to up and die.”

Well aware of the cultural dimensions, as well as the economic stakes, the industry is trying to turn around public perception of these monuments to America’s favorite pastime: shopping.

In August, the International Council of Shopping Centers, a trade group based in New York for the shopping center industry, including mall owners, hired the public relations firm Burson-Marsteller “to put the real story out there and stop the negativity around the idea that the mall isn’t going to exist in the next few years,” said Jesse Tron, communications director for the trade group.

While it is true that many thriving malls will continue to flourish in the years ahead, it is not clear what the industry can do to prevent more and more malls from falling on hard times.

About 80 percent of the country’s 1,200 malls are considered healthy, reporting vacancy rates of 10 percent or less. But that compares with 94 percent in 2006, according to CoStar Group, a leading provider of data for the real estate industry.

Nearly 15 percent are 10 to 40 percent vacant, up from 5 percent in 2006. And 3.4 percent — representing more than 30 million square feet — are more than 40 percent empty, a threshold that signals the beginning of what Mr. Busch of Green Street calls “the death spiral.”

Industry executives freely admit that the mall business has undergone a profound bifurcation since the recession.

“You see the A-rated malls, the flagship malls, performing very well,” said Steven Lowy, co-chief executive of Westfield Corporation, which has its roots in Australia but is now a major global player among mall owners. In the United States, Westfield has shed properties in the Midwest while focusing on the more affluent coasts. In Europe, Mr. Lowy prefers wealthy urban centers like London and Milan.

“Our business is more regional and high-end focused,” he said. “There are gradients of dead or dying or flat, but anything that’s caught in the middle of the market is problematic."

Tom Simmons, who oversees the mid-Atlantic shopping center division of Kimco, another real estate giant, is more blunt. “There are B and C malls in tertiary markets that are dinosaurs and will likely die,” he said, but “A malls are doing well.”

But there is a fuzzy line among the categories. White Flint Mall, a once-upscale destination in the affluent Washington suburb of North Bethesda, Md., is now sealed and awaiting demolition. A half-hour’s drive to the east, in the economically and ethnically diverse Prince George’s County, the Landover Mall was torn down in 2006, leaving empty parking lots and one stand-alone Sears, which closed in early 2014.

Both properties belong to the Lerner family of Washington, who are also the majority owners of the Washington Nationals baseball team. Lerner Enterprises has said it wants to redevelop both sites, but there are few signs of it in evidence.

Outside Akron, Ohio, the Rolling Acres mall has defied every attempt to redevelop it and now sits forlorn, with boarded-up windows and trees growing through cracks in the concrete. Before it was sealed, squatters occupied it and vandals pilfered copper wire for scrap.

When it was thriving, “people would come from all over in busloads,” said Timothy A. Dimoff, a retired Akron detective who once advised on security at Rolling Acres. “Everybody in Akron still talks about the caramel popcorn in the food court.”

Owings Mills may be on the verge of becoming a dead mall, but it is not in a dead-end market.

The original owner of Owings Mills, General Growth Properties, sold a 50 percent stake to Mr. Simmons’s company in 2011, and now Kimco is working to redevelop it into a hybrid of an open-air shopping center and enclosed mall.

Resurrecting a dead mall isn’t an easy process, however. Demolition of the old Owings Mills and construction of what is known in the industry as a “power center,” with big-box stores like Costco, Best Buy and Target, would cost $75 million to $100 million and take two to five years, Mr. Simmons said. He expects Owings Mills to persist in its current, zombielike state at least through the end of 2015.

Its demise, he said, was primarily because shoppers were drawn to other properties nearby like the more upscale Towson Town Center. Although Owings Mills was originally designed as a luxury property, the mall found it harder to compete after Saks Fifth Avenue closed its anchor department store there in the mid-1990s.

“The mall genie was out of the bottle,” Mr. Simmons said, “and it was never going to come back.”

A version of this article appears in print on , on Page A1 of the New York edition with the headline: The Economics (and Nostalgia) of Dead Malls. Order Reprints | Today’s Paper | Subscribe